U.S. Stocks Fall Amid Middle East Tensions, Nike and ADP Payrolls in Focus
U.S. stocks fell on Wednesday, as escalating tensions in the Middle East and disappointing news from sportswear giant Nike weighed heavily on investor sentiment. On Tuesday, the major indexes recorded a negative session on Wall Street, the first trading day of the new month and quarter, following Iran’s launch of ballistic missiles at Israel in retaliation for Israeli strikes against Hezbollah in Lebanon.
The Dow Jones index dropped nearly 170 points (0.4%), the S&P 500 index was down almost 0.9%, and the tech-heavy Nasdaq Composite plunged 1.5%.
Middle East Tensions Hit Risk Sentiment
The negative sentiment persisted on Wednesday after Israeli Prime Minister Benjamin Netanyahu vowed retaliation for Tehran’s airstrikes, stating that Iran had “made a big mistake” and “will pay for it.” The United States also warned of “serious consequences” for Tehran’s actions, with Defense Secretary Lloyd Austin emphasizing that Washington is “well prepared” to defend its interests in the Middle East.
While the situation may escalate further, UBS analysts expressed their view that “it will not result in an all-out war between Israel and Iran, including their respective allies.”
Nike Withdraws Its Full-Year Forecast
Adding to the negative market sentiment, Nike (NIKE) disappointed investors by withdrawing its full-year forecast and reporting a 10% drop in quarterly revenue. As a result, Nike’s shares dropped more than 5% before the market opened.
This development comes at a time when Nike is undergoing an executive-level shake-up, with current CEO John Donahoe being replaced by company veteran Elliott Hill. Donahoe’s tenure saw the company struggle with stiff competition in the $150 billion-a-year global sneaker market, contributing to weaker results.
ADP Payrolls in Focus
The monthly ADP private payrolls release will provide further insight into the state of the nation’s labor market.
The ADP private payrolls release will provide more information regarding the current state of the U.S. labor market ahead of Friday’s non-farm payrolls release, which will likely signal the direction of the market ahead of the Federal Reserve’s next interest rate meeting.
Oil Prices Rise Amid Middle East Turmoil
Crude oil prices surged on Wednesday due to the escalating tensions in the Middle East. Meanwhile, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are set to meet later in the session, though no immediate changes in production are expected.
U.S. crude inventories fell by approximately 1.46 million barrels in the week ending September 27, compared to expectations of a 2.1 million barrel decline, according to data from the American Petroleum Institute. The official government inventories report is expected later in the day.